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3232Household gas consumers, caught in the crossfire of market liberalizationhttps://asociatiaenergiainteligenta.ro/?p=3095&lang=en
Thu, 21 May 2020 06:15:40 +0000https://asociatiaenergiainteligenta.ro/?p=3095Household gas consumers have just over one month to find information, analyze and negotiate the gas contract, which will influence their budget in the following winter. Precisely 40 days before the deadline for moving household consumers to the free gas market, ANRE recommends, in a statement, household consumers to pay attention to what they sign, indirectly telling them that they are responsible for the potential high prices they will pay after July 1, 2020. Even if this statement includes no word about the 80% of the suppliers that were required to inform household consumers and didn’t; no word about the fact that the offers placed on the market by the existing gas suppliers are higher than the gas price offers under the current contract; no word about the lack of a national campaign to inform consumers, although there are millions of RON that household gas consumers pay in the current gas price and which should be used precisely for such campaigns; no word about the numerous referrals on the use by household consumers of the calculator of the gas price on ANRE website, we are waiting for statements on these issues from ANRE. This statement of ANRE comes against the background of the Fair Gas Price Campaign conducted by the Intelligent Energy Association, which reports the harsh realities of the process of preparing market liberalization for household customers. We are reassured that gas prices cannot increase for household consumers as of July 1, 2020, this in conditions in which it has already increased for those household consumers that have already accepted the gas offer received and for which this increase in the gas price as of July 1 has been sealed. In this period when there was no concern for the household consumer, special emphasis was placed on the development of a so-called Gas Release Program (a healthy concept, but not as it is presented in the Romanian law), under which gas prices will decrease at producers. This in conditions in which gas prices at producers fell to half the average market price recorded last year, this decrease not being reflected in the price at end-consumers or in the price offers for the household consumers after the date of July 1, 2020. Although there was no position regarding the increase in the price of gas offered to household consumers, in this troubled period legal acts were issued to decrease the price of gas from domestic production, purchased by suppliers, which they offer at increased prices to household consumers. The Intelligent Energy Association will continue to monitor the gas market liberalization process for household consumers, reporting the difficulties of the liberalization process and trying to present solutions and support.

]]>Bucharest residents should only accept after liberalization gas offers with discounts of 5.5-21% compared to the current pricehttps://asociatiaenergiainteligenta.ro/?p=3031&lang=en
https://asociatiaenergiainteligenta.ro/?p=3031&lang=en#respondTue, 12 May 2020 05:12:24 +0000https://asociatiaenergiainteligenta.ro/?p=3031Gas suppliers have started to send offers to
customers for the period after market liberalization, due as of July 1, 2020. A
first offer that I received from my supplier in April 2020 presents a price
increase compared to 2019 by 163% for a studio owned in Bucharest and where I
have an annual consumption of 500 kWh. Dissatisfied with the proposal, I notified the
supplier and publicly warned on such practices in an article published on
Intelligent Energy Association blog. Therefore, in May, the same supplier came up with another offer,
much better, this time proposing a price by 0.8% lower than that paid in 2019.
I think it is very important to continue writing about this issue, to encourage
you to be equally persevering.

The pandemic leaves
marks, so does the failure to pay attention to gas offers received from
suppliers

We are in a context where many household
consumers, with their eyes on the pandemic and the sanitary crisis, risk being
in the situation where, after July 1, 2020, after liberalization, they will
have a very high price. The legislation preparing the gas market
liberalization, which would have had the role of supporting household
customers, is either missing (I mention the lack of an institution for the
settlement of disputes on the gas market (SAL), as autonomous,
non-governmental, apolitical, of public interest legal entity, whose activity
would be to mediate conflicts on the market, according to Directive
2013/11/EU), or it favors suppliers (Article 4 of ANRE Order 27/2020:
“should household customers fail to conclude a gas supply contract, gas supply
will continue to be carried out, but at the price related to the offer
communicated to the customer”).

The third offer has
big chance to be the best

Therefore, what I encourage you all to do is
to request a second and third gas offer from your suppliers. What I believe is
that there will be even a third gas offer from suppliers, most likely in June
2020. The price under it may be much lower, but this only if there is a
reaction from consumers, showing at individual level their dissatisfaction
regarding prices offered by suppliers, and also joining a global reaction at
the level of public opinion regarding the non-competitive offers.

Focus on offers in
Bucharest

I will make an analysis of the potential price
levels, which should be discussed correctly at the level of Bucharest. I chose
the Capital for analysis because this is where I started the analysis in April,
but I will also try the same type of analyzes for other cities and regions in
Romania. In various areas of the country, there are different distribution
operators, each with another distribution tariff and thus the final price
varies.

In Bucharest, there are three major categories
of household consumers:

Located in apartments
and who use gas for preparing food, with a relatively constant consumption
during a month and which is around 100 kWh;

Located in apartments
with an average area of 50sqm and who use gas to prepare food, for hot water
and heating, with a relatively constant consumption during summer months of
around 200 kWh and a consumption during winter months of around 1,100 kWh;

Located in individual
homes with an average area of 100sqm and who use gas to prepare food, for hot
water and heating, with a relatively constant consumption during summer months
of around 200 kWh and a consumption during winter months of around 4,000 kWh.

Analyzing the price at which gas is sold on
BRM (https://brm2.itcm.ro/piata-forward-gn/), I notice that it is approximately RON
0.05/kWh for summer months and about RON 0.074/kWh for gas to be delivered in
the winter of 2020/2021.

Further, very understanding, I consider that
my supplier purchases gas on the exchange at these prices, resulting in a
different cost of hydrocarbons purchased for consumers during summer/winter,
added to which are the costs with the transmission and distribution services
and a trade markup of 2%.

For the first case, gas used to prepare food
should have a Fair Gas Price not exceeding the value of RON 0.10179/kWh.

For the case where gas is used in an apartment
(food preparation, hot water and heating), a Fair Gas Price should not be
higher than RON 0.11352/kWh.

Next, for the situation where gas is used in a
home (food preparation, hot water and heating), a Fair Gas Price should not be
higher than RON 0,11712/kWh.

Instead of conclusion

Therefore, if we consider in calculation the
estimated cost of gas (according to the current quotations on the gas trading
platform, managed by the Romanian Commodities Exchange (BRM), the service
tariffs and the trade markup of the supplier), a Fair Gas Price of hydrocarbons
supplied in Bucharest for household consumers, for gas to be supplied after
July 1, 2020, should vary between RON 0.10179 and RON 0.11712/kWh. These values
involve minimum discounts between 5.5% and 21% compared to the level
offered to me in May and which was RON 0.12352/kWh.

The reactions of
consumers to suppliers are the only ways to determine them to make new offers
to the level where the consumer can get a Fair Gas Price. The Intelligent
Energy Association will continue the Fair Gas Price Campaign started in 2015
and in the following period will monitor the price offers on the market and
make recommendations for gas consumers both through written analyzes and
through webinars organized on media platforms.

]]>https://asociatiaenergiainteligenta.ro/?feed=rss2&p=30310The use of hydrogen blended with natural gashttps://asociatiaenergiainteligenta.ro/?p=3010&lang=en
https://asociatiaenergiainteligenta.ro/?p=3010&lang=en#respondMon, 11 May 2020 12:55:30 +0000https://asociatiaenergiainteligenta.ro/?p=3010The
use of hydrogen blended with natural gas

Hydrogen
has the greatest potential in decarbonizing energy sources for households
(heat, domestic hot water and cooking energy sources), once certain technical
and safety aspects can be overcome. Converting the current system of
distribution and supply of natural gas to one based entirely on hydrogen is a
path that requires the intervention of the central authorities of the state,
parliament, government, as well as other authorities (ANRE, ISCIR, etc).

The
first actions for introducing hydrogen into the energy sector clearly involve
large-scale development demonstration projects, allowing for further commercial
expansion. These projects can start (1) from scratch when for certain
categories of users, distribution and supply systems for 100% hydrogen can be created
or (2) they can inject hydrogen into existing distribution networks, to be
mixed with natural gas up to a safe limit. Regardless of the scenario chosen,
the legal framework regarding gas regulation and marketing will have to be
modified and adapted to allow the introduction of hydrogen into the energy
system. It should be understood that, including in the transition phase,
hydrogen and natural gas cannot be treated separately in the context of a
sustainable energy mix, whether we refer to transportation, distribution,
supply, marketing or end users.

Blending hydrogen into natural gas pipeline networks is
proposed as a means of delivering hydrogen to end users, while using separation
and purification technologies to extract hydrogen from the natural gas blend.

As a hydrogen delivery method, blending can defray the cost
of building dedicated hydrogen pipelines or other costly delivery
infrastructure during the early market development phase. Until well into
the 20th century, hydrogen-rich town gas or coke-oven gas with a high hydrogen
content (50 vol%) was distributed to households in Germany, the USA and
England, via gas pipelines. The infrastructure elements that were
installed at the time, such as pipelines, gas installations, seals, gas
appliances etc., were designed for hydrogen-rich gas and were subsequently
modified, with the transition to natural gas.

Many countries are currently seeking to add hydrogen into the
existing natural gas networks, even though there are currently no relevant
standards or experience in the field. However,
for scientific and technical reasons, it is considered possible to introduce
quantities of between 2 vol% and 20 vol% hydrogen without a negative or
significant impact on end-users and infrastructure or pipelines, for which a
number of pilot projects, technical studies and pre-normative approaches have
been launched.

For
the same reasons, larger additions of hydrogen are
considered to require, in some cases, costly conversions of pipelines,
connections, sensors and equipment. In countries such as Germany, this limit
has been preventively limited to 10% vol. In
principle, gas at concentrations of up to 10 vol% hydrogen can be transported
in the existing natural gas network, without the risk of damaging the gas
installations, the distribution infrastructure, etc.

However, due to components still considered critical and
generally unsuitable for operation with these hydrogen concentrations, the
currently authorized value is limited even up to 2 vol%, especially for CNG
vehicles.

It can be assumed that many of the gas transport networks,
distribution lines and storage facilities can be converted into pure hydrogen
networks. In Leeds (UK), for instance, the possibility of converting the
existing natural gas network in the region (used primarily for municipal
heating supply) entirely to hydrogen has been explored. Given the existing
infrastructure, especially the length of large gas networks, many countries are
tempted to convert a gas network into a hydrogen network at minimal costs,
rather than building a completely new one.

The
benefits of adding hydrogen to the natural gas network are the following:

Overall
benefits: significant reduction of greenhouse gas emissions, if hydrogen is
produced from renewable sources;

Hydrogen
in automotive applications: potential benefits from reducing petroleum
consumption and import, along with improving air quality by reducing sulfur
dioxide, nitrogen oxides, and particulate emissions;

Greening
natural gas: when a hydrogen/natural gas mixture is used in existing appliances
for heat generation, cooking and cogeneration. This benefit is similar to
increasing the mix of renewable generation on the electricity grid, without the
need for significant changes in end-user equipment.

Avantajele
arderii amestecului de gaze naturale (metan) cu hidrogen:

Combustion of natural gas
(methane) mixed with hydrogen
– advantages:

like methane, hydrogen is not poisonous
(but it can cause asphyxiation;
it is explosive!);

it has a fairly high spontaneous ignition
temperature, so it needs a spark to ignite;

it has very high flammability limits,
which means it is easy to maintain a flame;

combustion results in water vapor, thus eliminating
CO2 emissions; and

it burns at a much higher flame rate (300
cm/s) than methane (30 cm/s), thus stabilizing the flame.

]]>https://asociatiaenergiainteligenta.ro/?feed=rss2&p=30100Romanian gas that does not have 85% methane content will no longer be allowed for sale. This is the proposal of ANRE Romania!https://asociatiaenergiainteligenta.ro/?p=2999&lang=en
https://asociatiaenergiainteligenta.ro/?p=2999&lang=en#respondFri, 08 May 2020 05:46:28 +0000https://asociatiaenergiainteligenta.ro/?p=2999ANRE has drawn up and
proposed for debate a Draft Order amending the Regulation for metering traded
gas no. 62/2008, through which it wants to change only one figure. The minimum
methane content of natural gas delivered to be 85% instead of the current level
of 70%. As of 2008, the sale of natural gas in Romania is made in kWh energy
units, which makes it mandatory to continuously determine the composition and
correct energy contained depending on the components existing in gas. Given
that in Romania and Europe gas is mainly used in combustion processes, the
important parameters are the quantity of energy contained by natural gas and
their relative density and the ratio of methane, ethane, propane and butane is
less important. The methane quantity becomes important however in chemical
processing, where a large methane composition increases significantly
productivity in the chemical industry. The regulation for metering the gas
quantities traded in Romania was drawn up in 2008 and subsequently numerous
elements that needed improvement were signaled to ensure a correct metering of
gas for its trading. In the 12 years of application of this Regulation, but
especially over the past few years, there have been several amendment and
improvement proposals submitted to ANRE by gas market participants. Several
proposals have remained however without debate, although their objective was a
fair metering of flows/energy of gas sold and the supply of quality gas. For
example: correlating the value of the dew point of water vapors with the value
provided in the Romanian national standard SR 3317/2015; optimizing the limit
value of the dew point of water vapors to reduce the operating expenses of gas
producers in Romania; the double standard for the dew point of hydrocarbons; harmonizing
the limits of parameters of gas properties with those included in the best
practices of European operators CBP 2005-001/01. While the elements reported in
this Metering Regulation are not under discussion, there is a request from the
representatives of the Hungarian gas industry and immediately a Draft Order is
issued which changes a single figure, namely the concentration of methane in
gas delivered (traded) on the territory of Romania or from Romania to EU
countries (Hungary or Bulgaria) and sets without technical or economic
arguments that this ratio should be at least 85% for methane. I analyzed the
Hungarian standards on gas quality in Hungary, MSZ ISO 13686: 2013 and MSZ
1648: 2016 and there is no limit value provided for the methane content. The
transmission operator FGSZ, through the annex to the transmission contract
regarding gas specifications:

does not impose and
makes no reference to the methane content in the composition of gas accepted in
the Hungarian gas transmission system. Transgaz confirms through the annex to
the interconnection agreement Romania-Hungary:

that a 70% methane
content is acceptable for takeover in the Hungarian system. I conducted the
same analysis for the other EU member country, Bulgaria, connected to the
national gas transmission system in Romania through Giurgiu-Ruse and Negru
Voda-Kardam points. For this direction as well, Transgaz confirms that the
Bulgarian operator requires a minimum content of 70% methane in the composition
of gas transported:

In ANRE’s explanatory memorandum supporting this
change there is no reference to the economic impact of this legislative act. In
Romania there are fields that do not continuously fulfill this requirement of
permanently having gas with a methane content of over 85%, a requirement which
is not a condition or recommendation in the European standards (see EN 16726 or
EASEE CBP 2005), so these fields should not be closed or limited in gas
deliveries when the methane level is below 85%. This means economic losses and
a decrease in Romania’s gas production, with the increase in imports that
lately have been made especially from Hungary. Moreover, a review of the
Metering Regulation requested for over 3 years by Romanian companies could have
been at least one complete and take into account the requirement mentioned
above together with its influence on the other quality parameters under the
Regulation affected by this change, but which remain in force. The explanatory
memorandum of ANRE does not mention why it intends to make such change given
that natural gas is sold depending on its energy value, which is proportional
with the composition of gas. Maybe to save the domestic gas production in the
neighboring country, where fields that produce gas with 55% methane and which
co-mingled with gas with an 85% methane ratio would reach the required limit?
Maybe to increase and secure the productivity of the petrochemical industry of
the neighboring country? Maybe to increase gas import in Romania? Irrespective
of the real reason why it proposes the amendment of the Regulation, this
example shows again the defiant and unprofessional way of working procedures in
ANRE, procedures that neglect through the proposed draft the total impact on
gas producers and consumers in ROMANIA.

]]>https://asociatiaenergiainteligenta.ro/?feed=rss2&p=29990Hydrogen in Praha, Czech Republichttps://asociatiaenergiainteligenta.ro/?p=825&lang=en
https://asociatiaenergiainteligenta.ro/?p=825&lang=en#respondThu, 30 Apr 2020 15:34:34 +0000https://asociatiaenergiainteligenta.ro/?p=825Last month was held in Prague the event titled THE 7th WORLD HYDROGEN TECHNOLOGY CONVENTION together with CZECH HYDROGEN DAYS 2017 9 – 12 JULY 2017.
The organizers, Czech Hydrogen Technology Platform, thanks to all participants for the success of the event.
There was 513 delegates from 45 countries arrived to Prague and they presented 144 oral presentations and 124 posters. Everybody enjoyed the presentations and discussions as well as the social life of the convention.
Romanian Association for Hydrogen Energy also was present there.
Next conference will be Tokyo in 2019.

]]>https://asociatiaenergiainteligenta.ro/?feed=rss2&p=8250Recommendations for the industrial gas consumers in Romania, in the context of COVID- 19 crisishttps://asociatiaenergiainteligenta.ro/?p=2882&lang=en
https://asociatiaenergiainteligenta.ro/?p=2882&lang=en#respondWed, 15 Apr 2020 11:16:35 +0000https://asociatiaenergiainteligenta.ro/?p=2882The Intelligent Energy
Association makes a series of recommendations to industrial gas consumers,
taking into account the recent developments on the domestic and international
markets. The recommendations below refer to two situations. The first situation
is that where the contract of the gas consumer will expire soon, and the second
situation is that where the contract of the gas consumer is concluded for a
long term. Currently, in Romania, there are approximately 188,000 non-household
consumers, which have contracts concluded with 166 gas sellers (licensed
suppliers).

The contracts that expire can be negotiated in very advantageous terms

If you are in the
situation where the supply contract expires soon, it’s time to request an offer
from gas suppliers based on the recent evolution of prices. It is best to
address a larger number of suppliers, our recommendation being to request
offers from 10 gas suppliers. To choose them, you can consult the following
page: https://portal.anre.ro/PublicLists/LicenteAutorizatiiGN. Based on the offers
received, there are two ways to approach negotiation. One with a higher risk,
in which we recommend that you conclude a contract with a validity of only six
months. In this way, you can obtain in this period a fixed price very
advantageous in relation to prices that a consumer paid before April 2020. This
approach has the risk that in the event where things go back to normal in the
following months gas prices could start to grow from October 2020, compared to
summer prices, and the negotiation in October could bring higher levels. But in
the event where in autumn we face a return of the pandemic, amid the
seasonality predicted by some researchers for the COVID-19 virus, you can
obtain again an advantageous price, for winter, during the negotiation of the
contract for the following six months.

Another approach with a
lower risk is the conclusion of a contract for a 12-month period, through which
you have the guarantee of deliveries for the following year and you can also
obtain a fair price for this period.

Older contracts can also be renegotiated in favorable terms for consumers

If you have a contract
concluded in early 2020 or previously, the recommendation of the Intelligent
Energy Association is to request the existing supplier(s) the renegotiation of
clauses to adapt to the current conditions. Given the current situation,
according to the data of the Intelligent Energy Association, most suppliers are
in general open to renegotiation. But if you don’t find an open dialogue, in
accordance with the legislation in force any consumer may give up the existing supplier
within 21 days, especially if under the existing contract it did not agree with
commercial clauses undertaking to pay certain direct or indirect financial
penalties if the contract is terminated early. The recommendation of the
Intelligent Energy Association is that all consumers with contracts concluded
closely monitor market evolution and whenever they consider the price under
their contract is not fair to request the supplier to renegotiate it or if no
understanding is shown by their supplier to request new offers from the market.
However, it is very important that the analysis you make regarding the
contractual price be correct, otherwise you may end up in the situation where
you can irritate the supplier with unjustified claims and cause its aversion to
the company you represent. Further, this
aversion may negatively reflect on the commercial relationship and can even
lead to the termination of the contract. The analysis must be based on
monitoring the trend of gas prices on gas exchanges and include, if possible,
other analyzes conducted by the profile market.

General recommendations of the Intelligent Energy Association

In the context where the
gas quantities consumed decreased and the delivery schedule in the following
months has become unpredictable due to reduction of activity in various
sectors, we notice the tendency of some suppliers to impose take-or-pay
contracts and/or contracts with reduced daily/monthly flexibility, but with
important financial penalties for consumers. The Intelligent Energy Association
points out that in the previous years gas contracts for the industrial
consumers were in general quite relaxed in terms of monthly flexibility and
often under the stimulus of an advantageous price suppliers overlooked such
obligations. Currently, in the context of the current crisis, which brings a
great unpredictability on the continuation of business of consumers amid
restrictions or the consumption level such contracts can become very
detrimental. The industrial consumers have the tendency to prefer fixed gas
prices throughout the term of the contract. In this period with unpredictable
evolutions it is very difficult to determine a correct fixed price. This
difficulty in identifying a correct fixed price for a period of one year makes
suppliers in general to offer higher fixed prices, to cover the potential
errors. The recommendation of the Intelligent Energy Association is to give up
this approach this year and choose another version from those below, with the
specification that these are general approaches that must be analyzed for each
case and should not limit only to the situations presented:

1. An approach that
brings a lower risk for consumers is to establish two fixed prices, one for
summer and another for winter;

2. Another approach with
a greater risk is to determine a variable price depending on the monthly
evolution of the price on gas exchanges;

3. Between the two
approaches various combinations can be made so that consumers ensure a fair gas
price in conjunction with the accepted risk level.

The Intelligent Energy
Association recommends consumers to conclude contracts with a duration of one
year, with flexible clauses regarding the delivery schedule, with payment
methods and terms specific to the possibilities and with a price determined
depending on risk appetite (consumers with a high risk appetite – price related
to the monthly price on gas exchanges; for consumers with low risk appetite – a
fixed price).

Short glimpse into the future

The price of gas will
follow a downward trend in the following months, a trend that will probably
change within six months, when we expect to witness growths, following the
increase in demand and also the sale on the hydrocarbon market from the storage
facilities (this will add to gas prices the storage costs).

Clauses of a contract: price, delivery schedule,
payment methods and deadlines, term of the contract etc. are elements that must
be adapted for each consumer, not being able to establish unique approaches for
all customers, especially in such an unpredictable period. We need to consider
that no one knows exactly how long the state of emergency will last in Romania,
we don’t know whether in autumn the virus will return and there will be new
measures of social distancing, we don’t know exactly what the effects of the
economic crisis will be and so on. If we focus on the certainties we can have
in this challenging environment, everyone will definitely have more to gain.

]]>https://asociatiaenergiainteligenta.ro/?feed=rss2&p=28820Gas price cap, a populist decision that favors gas importers and suppliers and not consumershttps://asociatiaenergiainteligenta.ro/?p=2715&lang=en
https://asociatiaenergiainteligenta.ro/?p=2715&lang=en#respondMon, 30 Mar 2020 13:17:26 +0000https://asociatiaenergiainteligenta.ro/?p=2715The
capping of the price of natural gas (together with the prices of other
utilities), recently taken by the Government, favors gas importers and
suppliers and affects consumers. Thousands of consumers are at risk of
this state intervention to pay higher prices for natural gas than if
prices were allowed to continue their downward trend stated the
Intelligent Energy Association in a press release.

“In
the gas market, we have an oversupply even before the appearance of the
COVID-19 pandemic, which has determined that from January 2020 the
prices will fall and even decrease sharply. The large quantity of gas
left in the deposits at the end of the 2020 extraction cycle, the
oversupply of imports, the measures to “expensive” the gas storage for
the 2020/2021 cycle, all of which led to the further decrease of the
price of natural gas in the next 5-6 months “, said Dumitru Chisăliță,
president of the Intelligent Energy Association.

“The
decision of the cap authorities is a populist one, which does not take
into account these realities. This measure could change the current
trend of sharply lowering the price on the natural gas market in Romania
”, added the president of the Intelligent Energy Association.

According
to the data of the Intelligent Energy Association, gas suppliers are
experiencing a visible decrease in gas demand since the declaration of
state of emergency (consumption decreased in March 2020 by 15-20%
compared to consumption in March 2019) or even with the closure of some
consumers. . Therefore, lately it is renegotiating the contracts with
the extension of the payment terms and the decrease of prices.

According
to the association, the authorities should amend the following article
of the recent ordinance: “During the state of emergency, the price of
natural gas cannot be raised above the level practiced at the date of
issuing this military ordinance, it can only be reduced according to
demand and supply”, it is deficient and does not protect final
consumers, as stated intention. This article should be amended in the
following sense: “the price of natural gas at the final consumer cannot
be increased above the level practiced in the contracts existing at the
date …”.

In
this situation, the respective article would have a utility to prevent a
very possible situation of increasing the price of natural gas in the
next period, at the level of the final consumer.

]]>https://asociatiaenergiainteligenta.ro/?feed=rss2&p=27150Industrial customers and certain household customers will be the main losers if gas market liberalization is postponedhttps://asociatiaenergiainteligenta.ro/?p=2563&lang=en
https://asociatiaenergiainteligenta.ro/?p=2563&lang=en#respondWed, 26 Feb 2020 06:03:16 +0000https://asociatiaenergiainteligenta.ro/?p=2563Industrial customers and educated household consumers will be the
main losers if gas market liberalization is postponed, in the context in which
Ordinance 1/2020 does not enter into force, as we currently expect. At the same
time, the beneficiaries would be some suppliers and importers of natural gas.

The Constitutional Court has recently admitted that Ordinance
1/2020 for the amendment of GEO 114/2018 is unconstitutional, after GEO 1 had
already been rejected on February 10, 2020 in Romania’s Senate. The Ordinance
would be debated in the Chamber of Deputies, which is the Decisional Chamber,
and if it is rejected again the provisions of GEO 114/2018 will reapply.

If Ordinance 1/2020 is no longer in force, the main losers will be
the industrial customers, which will be required to pay again higher prices
than producers of similar goods in other countries, thus risking to lose
marketplaces and even have important financial problems. Educated household
customers, which could obtain better prices through liberalization, will also
lose.

According to data obtained within the “Fair Gas Price”
Project, the Intelligent Energy Association estimates that currently
less than 5% of the household customers are educated and able to negotiate
their contracts and obtain better prices for gas consumed.

At the same time, it is important to mention that the re-entry
into force of GEO 114/2018 would involve the application of the contribution of
2% applied to the turnover obtained from electricity and gas sales, which will
influence the price of gas for end-consumers (together with the other
provisions).

Currently, only four months before the date set for liberalization,
we are in the paradoxical situation of not knowing whether it will take place
or not, whether suppliers must send offers for household consumers, whether
these offers will consider the taxes and tariffs under GEO 1/2020 or those
under GEO 114/2018. If GEO 1/2020 is repealed by the Parliament of Romania and
gas market liberalization no longer takes place on July 1, 2020, the
beneficiaries will be some gas suppliers that will obtain higher profits due to
capping the price of gas for population and from the increase in the price of
gas for industrial consumers. Importers
will also gain, as they will register higher profits from gas sales in Romania,
following the market interventionism dictated by GEO 114/2018. For example,
2019 brought profit margins by up to 20% higher on the domestic gas market
compared to margins obtained in the Balkans.

The Association recommends Romanian state authorities to clarify
as soon as possible the direction in which the gas market is heading this year,
as the current state can cause hurdles and confusion in addition to the already
complicated situation of gas market liberalization.

The Intelligent Energy Association continues this year the
“Fair Gas Price” Project, through which it teaches consumers how to
act on a free market and how to protect themselves from certain
“traps” under the gas supply contracts.

TheIntelligent Energy
Association supports gas market liberalization. Although the term of four months for
preparing consumers is quite tight, we believe that if state authorities
concentrate their efforts they can help especially household customers to
become educated and able to negotiate advantageous contracts.

The Intelligent
Energy Association also supports the establishment of SALGAZ (Center for Alternative
Settlement of Disputes in the Gas Sector), in accordance with GEO 38/2015,
transposing Directive 11/2013, and tasking this center to urgently carry out a
program of information and organization of courses for training household
consumers negotiate their gas contracts on a liberalized market.

The Intelligent Energy Association brings together
professionals in the electricity and gas sectors, who advocate for a fair gas
price and for increasing transparency in Romania’s energy market. The mission
of the association is to contribute to a better information of gas and energy
consumers in our country.

Summary: Natural gas slumped to a four-year low on Monday. This the lowest seasonal price on record going back to 1990 has been driven by the continued absence of cold U.S. winter weather to drive demand from utilities towards heating. The route to salvation for this very important fuel increasingly have to come from companies cutting production, either voluntary or involuntary

Natural gas slumped to $1.83/therm in early trading Monday. The lowest level in almost four years and the lowest seasonal price on record going back to 1990 has been driven by the continued absence of a cold U.S. winter weather to drive demand from utilities towards heating. Just like Europe the States are witnessing a weak demand season with producers being unable to shake off a supply glut amid rising production.

The below charts highlight some of the challenges that the natural gas market has been facing for several months now. Last year a frigid cold blast into February helped drive down gas stocks to a five-year low at 1.1 trillion cubic feet (Tcf). What followed was the strongest injection season since 2014 as consumers and exporters struggled to keep up with the deluge of supply. While December saw the tightest trading range on record going back to 1990, the mild December weather resulted in Natural gas inventories starting 2020 some 20% higher than the previous year (Source: EIA’s STEO)

Unless we see a pickup in demand or a slowdown in production the market will begin to worry that storage capacity could be reached towards the end the coming injection season which runs from late March to November. Weekly storage change data from the Department of Energy (DOE), released on Thursday’s at 15:30 GMT gives the market important information in this regard.

After peaking at 96 Bcf/day in late November natural gas production has since dropped to the current 91.7 Bcf. Pipeline deliveries to LNG terminals almost doubled during 2019 to reach 8 Bcf/day and LNG exports look set to continue to rise, not least due to expectations that China, as part of the trade deal, will boost demand for U.S. gas.

Despite the recent production slowdown and rising exports the price has nevertheless still slumped. On that basis the route to salvation for this very important fuel increasingly have to come from companies cutting production, either voluntary or involuntary. Peter Garnry will be taking a look at energy stocks in a separate article here on www.analysis.saxo

The already record short in natural gas expanded further by 7% to 267k lots in the week to January 14. Any sudden change in the late winter outlook or a colder-than-normal spring is needed to shake the shorts. The four contracts used in the chart below are all either swap or futures contracts based on a price for delivery at the Henry Hub in Louisiana.

SOURCE: HOME.SAXO

]]>https://asociatiaenergiainteligenta.ro/?feed=rss2&p=23550BRUA, a priority for Romania, but the number 1 priority remains the re-engineering of the current gas transmission systemhttps://asociatiaenergiainteligenta.ro/?p=2333&lang=en
https://asociatiaenergiainteligenta.ro/?p=2333&lang=en#respondThu, 16 Jan 2020 20:27:16 +0000https://asociatiaenergiainteligenta.ro/?p=2333The Intelligent Energy Association answered to questions asked by ICIS London on the NTS Development Plan recently approved by ANRE.

The budget for Transgaz investments in 2019 was set at RON 2.44bn (see the revenue and expenditure budget for 2019 – version 16-05.2019 page 16/24). In mid-2019 only approximately RON 372.67mln had been spent (see the Directors’ Report for H1/2018 page 9/269). Do you think this budget was sufficient for investments?

No. First of all we should mention that the amount of RON 2.44bn included by TRANSGAZ in the revenue and expenditure budget for 2019 had to be reflected more clearly by TRANSGAZ, in a detailed annex, so that the value be the result of clearly mentioned investments (e.g. pipelines, compressor stations, gas metering stations, SCADA, cathodic protection etc.). This is a way to transparently present to gas consumers (these are the ones who will actually bear all these costs and the ones before which TRANSGAZ must justify first of all) the areas in which it plans to invest and also there is a possibility to publicly check how the Development Plan is fulfilled. According to the NTS Development Plan for the period 2018-2027 approved by ANRE on December 7, 2018, the estimated value of “strategic” investments expenses for 2019 was EUR 734.72mln, the equivalent of RON 3.47bn (see page 68/90), to which ALL the expenses necessary to implement the projects necessary to upgrade the current national gas transmission system presented in Annex no. 10 (pages 73-77/90) must be added. The minimum amount necessary for the investment budget for upgrading the NTS and aligning it from an operational point of view to the standards of the neighboring countries (Bulgaria, Serbia, Hungary, Ukraine, Moldova) is at least equal to the value presented in the National Development Plan for 2019-2028 recently approved by ANRE, on December 11, 2019, i.e. EUR 4bn (see page 100/126). This value reflects however the quality standards similar to design and execution works used by TRANSGAZ in BRUA Phase 1 project, which are by approximately 30% below the level of quality standards used in projects such as Interconnection 32” x 182 km Greece-Bulgaria or 48” x 475 km Balkan Stream BULGARIA section or Interconnection 32” x 108 km Hungary-Slovakia.

If not, how much do you think it should be allocated annually to upgrade the transmission system?

The clear image, close to reality, of the budget necessary for “NTS Modernization” cannot be estimated without clearly knowing/recognizing the condition of transmission pipelines. Lack of possibility to inspect approximately 70% of the total length of the pipelines, inspection conducted with PIG devices, and carried out after preparing and cleaning the pipelines, makes it IMPOSSIBLE to actually determine the maximum allowable operating pressure of pipelines and the implicit pressure of subsystems and in the end of the entire transmission system. An attempt to recognize this state was presented by operator TRANSGAZ in the Activity Report of Transgaz’s Manager of May 9, 2019 Annex 9 (see pages 41-47/55 “Development/Rehabilitation of the Priority System 2019-2021”) It can be noticed that the average operating pressure of 40 bar of the “priority system” has a lower value than any operating pressures in all the neighboring countries, including Serbia or Moldova. NTS modernization cannot be achieved without a detailed inventory of all items making up the current system, named the National Gas Transmission System, and their technical, legal and commercial unbundling. After making this inventory, which can clearly establish the physical wear or even the real value of assets, the analysis of the budget necessary for a NEW gas transmission system can be made. To answer the question, I believe that in order to bring the Romanian transmission system to the level of European transmission requirements an amount of over EUR 4bn is necessary. Annual distribution of this amount depends on the possibility to access funding; the fact is that any delay determines an increase in Romania’s energy vulnerability (in terms of quantity and price evolution).

What should be the priorities for upgrading the transmission system – meaning how should this money be invested?

The number one priority is administrative in nature and can take maximum one year: the clear and detailed inventory of assets within the national gas transmission system (assets given in concession by NAMR to TRANSGAZ) and of TRANSGAZ assets commissioned after the conclusion of the concession agreement and recognizing the physical condition and the risk factor in operation (buildings in the protection area, watercourse crossings with operation risk, routes with frequent landslides etc.).

The second priority is to actually determine the maximum allowable operating pressure of all pipelines and correlating them with the requirements of producers, to establish the usefulness of pipelines.

Completion of BRUA Phase 1 and of compressor stations Siliștea and Onești.

Redefining the NTS from a technical, legal, commercial and organizational point of view, as follows:

D.1. Technical – Reconsidering the NTS on three operating regimes

Operating pressure 50-63 bars;

Operating pressure 35-60 bars;

Operating pressure <35 bars.

Note: The provisions of European technical and commercial rules for gas transmission can only be applied to systems with operating pressures higher than the value of 35 bars.

D.2. Legal – reconsidering the system of concession and royalties:

National Transmission System – all pipeline systems operating at an operating pressure of more than 35 bars

Local Transmission Systems – all pipeline systems operating at an operating pressure of less than 35 bars, all transmission systems that are closed systems of source-consumer type

Local Transmission Systems – applying a set of rules specific to the system and not applying the European rules

D.4. Organizational – reconsidering the gas transmission company:

Establishing a LTSGAZ company, independent, with capital fully owned by SNTGN TRANSGAZ SA and which would take over in concession all the local gas transmission systems to operate them and for which to have a specific tariff system.

SNTGN TRANSGAZ SA to remain with the exclusive concession of the National Transmission System, with interconnected pipelines, with specific gas transmission systems and where the European commercial rules would apply, which can be really integrated into the European Gas Transmission System and get Romania out of the technical semi-isolation of today.

Reconsidering the NTS and LTS Development Plan for a 10-year period and prioritizing works depending on future gas flows, where the priority should be:

– Preparing the pipelines for cleaning and inspection with smart PIG.

– Development and modernization must be broken down by the three pressure levels mentioned above and can include both new objectives and the upgrade of the existing ones. However, the modernization of the existing ones can only start by the careful analysis and recognition of the efficiency of “rehabilitation” works carried out by the operator in the period 2005-2019, works worth EUR 250mln which unfortunately failed to increase the gas quantities transported, leading only to a higher safety in operation, in parallel with the reduction of maximum operating pressures.

Do you think BRUA is a priority for Romania? If yes, why? If not, why not?

Yes. Because the investment was started and must be completed. As far as I know the feasibility of the project hasn’t been made public and I assume that the investment was justified both technically and economically, when the final investment decision was made.

If the national transmission system is not modernized, what are the risks for the Romanian gas market in the long run?

The annual increase in operating costs (e.g. operating budget used in 2007 of EUR 174mln vs. 2018 EUR 233mln), in parallel with the reduction of the transmission capacity (e.g. 2007 volume of 15.5bcm/year vs. 2018 13bcm/year), in the safety in operation, in the volumes transported and increasing Romania’s energy vulnerability.

Last but not least, the lack of modernization of the system will lead to higher tariffs and thus to higher gas prices for end-consumers.

How does the Romanian transmission system compare to those in the neighboring states of Europe?

From a technical point of view the current national gas transmission system is unique in Europe. In fact it is a system of “depletion” of the current deposits. Between the domestic gas sources, mainly the production blocks of Romgaz or OMV Petrom, and the consumption areas, given the current pressure regimes, no compressor stations are currently needed (or they are necessary only rarely, in special circumstances). This fact, together with the low operating pressures (leading to a low efficiency of the transmission services, high gas flow rates), makes the current NTS be a unique system in Europe. In comparison, the entire system in Hungary is operated at pressures of 40-70 bars, the underground storage facilities being able to inject into the system at pressures of 50-63 bars, similarly to import sources.

It seems that Transgaz will no longer transit Russian gas as of this year. In this case, how much will Transgaz lose annually due to the lack of gas transit?

According to financial data published by TRANSGAZ in 2018 and 2019, approximately 20% of revenues (around EUR 70mln) came from the transit activity. Given the cessation of the gas transit to Bulgaria-Greece-Macedonia-Turkey as of January 1, 2020, for 2020 it is possible to witness a reduction of revenues proportional to the physical volume, except for the capacity booking tariff via 48” Transit III.

Probably TRANSGAZ revenues in the following years will decrease by around 10-15%, due to elimination of the gas transit activity as it was organized in the last 46 years.

How will this loss of transit revenues affect investments in the Romanian transmission system?

To offset this decrease in revenues, TRANSGAZ will increase transmission tariffs for consumers in Romania; according to data published on the website of TRANSGAZ the capacity booking tariffs will double in the following 3 years. It should be noted that the impact of this price increase can be reduced by NTS re-engineering and reconsidering the development and modernization program and bringing it in the area of reality and optimizing the operating expenses.

To what extent the lack of a transit corridor in Romania could lead to its regional isolation?

Romania reduces its role as gas transit country. The isolation of the country was eliminated by achieving interconnections with Bulgaria via Negru Voda and Ruse-Giurgiu, with Hungary via Csanadpalota, with Ukraine via Medieșu Aurit and Isaccea, with Moldova via Iasi-Ungheni.

What financial sources could Transgaz access to ensure the modernization of the system?

Even private investment funds in the case of systematization of the current NTS, reconsidering the modernization/development plan and the period of return on investment/amortization.

What vision should Transgaz adopt for the Romanian gas market and for its regional role?

The vision must be included in the National Energy Strategy and in the Sectoral Policies. It must be submitted to TRANSGAZ for implementation; new indicators of management performance and efficiency of the transmission services must be defined. At national level, reconsidering the NTS leads to a higher management and operational efficiency. At regional level, TRANSGAZ’s role will decrease after the commissioning of the Balkan Stream corridor, unless new gas sources become available in South-Eastern Europe.

To what extent do you think Transgaz would require a new management to apply a long-term vision for the Romanian gas market?

After the answers to the other questions, the tendency would be to say that a new management would be necessary IMMEDIATELY. The deficient communication and organization (see the Organizational chart 2013 vs. 2019) are elements that can be attributed to Management, but the biggest problem is found at the level of Shareholders (public and private), which, fooled by the good dividends in the recent years and lacking vision, have not ordered appropriate guidelines and validated randomly Development Plans with a political flavor.